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UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA


In re: )
)
SCOTT ALLEN HURD and ) Case No. A89-00493
ERIN ELAYNE HURD, ) Chapter 7
)
Debtors. )
________________________________________)


ORDER DENYING ADMINISTRATIVE
CLAIM AND ALLOWING A GENERAL UNSECURED CLAIM


            The Trustee has objected to a proposed administrative claim submitted by Contempo I, a condominium association, for post-petition condominium dues in the amount of $1,004.64. Contempo I has submitted an extensive brief and affidavit in support of its claim. It has reviewed cases dealing with condominium dues many of which are "wildly inconsistent." It asks this court for a written opinion upon the validity of that claim as either an administrative claim or a general unsecured claim.

    I.   Facts.

            Scott A. Hurd and E. Elayne Hurd filed a chapter 7 bankruptcy on May 9, 1989. At that time they owed $659.76 in condo dues. The Debtors left the condominium on or before the date of the filing of the petition. The condominium had a fair market value of $19,500.00 and an encumbrance of $27,000.00. First National Bank of Anchorage moved for termination of the automatic stay and promptly obtained relief from stay on June 12, 1990.   TOP      1 ABR 144  First National foreclosed on October 31, 1989, non-judicially. $1,004.64 in condominium fees were incurred post-petition while the condominium was vacant. Unlike most chapter 7 liquidations, there are substantial funds in the estate. The pre-petition claims of the homeowners association and other unsecured creditors have been paid in full.

            Unless the homeowners association is entitled to an administrative or general claim, the funds will revert to the Debtors. The Trustee has filed a general objection to Contempo's post-petition claim which states:

    Creditors of the estate did not derive any benefit from this asset nor did the trustee take possession of, liquidate or administer the asset, and therefore any post petition claims regarding this asset should be disallowed.

    II.    Administrative Expenses.

            Administrative expenses are defined in 11 U.S.C. § 503(b) as:

            (1)(A) the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case
    . . .
    The Ninth Circuit has stated:

    The statute (11 U.S.C. § 503(b)) is explicit. Any claim for administrative expenses and costs must be the actual and necessary costs of preserving the estate for the benefit of its creditors. Matter of Baldwin-United
      TOP      1 ABR 145 
    Corporation, 43 B.R. 443, 451 (S.D. Ohio 1984). The terms "actual" and "necessary" are construed narrowly so as "to keep fees and administrative costs at a minimum." In re O.P.M. Leasinq Services, Inc., 23 B.R. 104, 121 (Bankr. S.D.N.Y. 1982); see also 3 Collier on Bankruptcy, paragraph 503.04, at 503-23 (15th ed. 1988). An actual benefit must accrue to an estate. See In re McKeesport Steel Castinqs Co. (Equitable Gas co. v. Equitable N.A., 799 F.2d 91, 94-95 (3rd Cir. 1986)) (postpetition gas services were properly ordered paid to utility as an administrative expense necessary to preserve going concern value of Chapter 11 debtors estate); Broadcast Corp. of Georaia v. Broadfoot, 54 B.R. 606, 611 (N.D. Ga. 1985) ("The mere potential of benefit to the estate does not satisfy this requirement"). Additionally, keeping costs to a minimum serves the overwhelming concern of the Code: Preservation of the estate. Otte v. United States, 419 U.S. 43, 53, 95 S. Ct. 247, 254, 42 L. Ed.2d 212 (1974); see also Randolph v. Scruggs, 190 U.S. 533, 537-39, 23 S. Ct. 710, 712, 47 L. Ed. 1165 (1903). This limitation is necessary to protect the limited assets of the estate for the benefit of the unsecured creditors' interests and is particularly important in a Chapter 11 case where a partial liquidation is necessary to facilitate reorganization. This portion of the Chapter 11 case here resembles a Chapter 7 liquidation case and, by analogy:
    Since the goal in a Chapter 7 case is to "cash out" the bankrupt entity, rather than continue its operations, Chapter 7 is more concerned with maximizing the size of the estate to be distributed than with the Chapter 11 goal of inducing third parties to contribute towards the continued operations of the business.
    Broadcast, 54 B.R. at 611.
      TOP      1 ABR 146 
            Hence, two factors must be weighed: maintaining the estate in as healthy a form as possible for the benefit of creditors while allowing essential costs of administering an ongoing business venture to be paid up front, thereby giving the debtor its best shot at emerging as a vital concern. Baldwin-United Corp., 43 B.R. at 452. Although a claim may meet the implicit requirement of section 503(b)(1)(A), namely that any claims under the section must have a distinct postpetition character, bankruptcy courts have broad discretion in determining whether to award administrative expense priority. Baldwin-United Corp., 43 B.R. at 453; Matter of Hearth & Hinqe, Inc., 28 B.R. 595 (Bankr. S.D. Ohio 1983) (administrative expense priority granted where storage and appraisal of the debtor's property protected and preserved the major portion of the estate's assets and thus conferred a benefit upon the debtor and its creditors). That discretion is limited by the clear intent of section 503(b)(1)(A): the actual and necessary costs of preserving the estate. See Matter of Jartran, Inc., 732 F.2d 584 at 586 (7th Cir. 1984). (footnotes omitted)

    In re Dant & Russell. Inc., 853 F.2d 700, 706-707 (9th Cir. 1988). There was negative equity in the condominium. There was nothing to preserve for the benefit of general unsecured creditors. Contempo I is not entitled to an administrative priority for post-petition condominium fees based upon the facts of this case.

    III.   General Unsecured claim.

           The claim is allowable as a general unsecured claim. 11 U.S.C. § 101(4)(A)provides:   TOP      1 ABR 147 

    (4) "claim" means--

            (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or . . .

    11 U.S.C. § 502(b)(1) provides:

    (b) Except as provided in subsections (e)(2), (f), (g), (h) and (i) of this section, if such objection to a claim is made, the court, after notice and a hearing, shall determine the amount of such claim in lawful currency of the United States as of the date of the filing of the petition, and shall allow such claim in such amount, except to the extent that--

            (1) such claim is unenforceable against the debtor and property of the debtor, under any agreement or applicable law for a reason other than because such claim is contingent or unmatured . . .

    11 U.S.C. § 502(c) provides:

    (c) There shall be estimated for purpose of allowance under this section--

           Under the broad definition of claim, the association has a claim for homeowners dues under applicable law. The fact that the claim is contingent or unmatured is irrelevant. Pursuant to Alaska condominium law, post-petition fees may be included in the claim as they are continuing obligations of the fee owner. The amount of the claim is not usually precisely liquidated, as it is here, and would ordinarily be subject to estimation by the claimant pursuant to 11 U.S.C. § 502(c).

      TOP      1 ABR 148 
            In analyzing the cases submitted by Contempo I relative to post-petition condominium fees, this court prefers the rationale of In re Elias, 98 B.R. 332 (Bankr. N.D. Ill. 1989) to that of Colorado bankruptcy courts in In re Lenz, 90 B.R. 458 (Bankr. D. Colo. 1988), In re Horton, 87 B.R. 650 (Bankr. D. Colo. 1987), Rink v. Timbers Homeowners Ass'n I, Inc., 87 B.R. 653 (Bankr. D. Colo. 1987) and the Northern District of Illinois court in In re Rosteck, 95 B.R. 558 (Bankr. N.D, Ill. 1988). As stated in Elias:

            The final reason offered by Rosteck is that it "is difficult, if not impossible, to extend [sec. 727(b)] to debts accrued postpetition." The court was distressed--understandably--with one possible consequence of holding postpetition assessments to be discharged debts for purposes of Chapter 7: it would seem to provide debtors with a "head Start" rather than a "fresh start" by enabling them to reside in their homes unencumbered by assessments, no matter how long after the discharge. See, e.g,, Lines v. Frederick, 400 U.S. 18, 21, 91 S.Ct. 113, 114, 27 L. Ed.2d 124 (1970) (Harlan, J., dissenting). We, too, are less than enthralled by this possibility, for it may cause more harm than good. See Shepard, Personal Failures and the Bankruptcy Reform Act of 1978, 27 J.L. & Econ. 419 (1984) (broad protections afforded to individual debtors create incentive for debtors to file for bankruptcy, and have led to substantial increase in personal bankruptcy filings). But we can see no statutory warrant for fashioning the exception recognized by Rosteck. Certainly, the court's reference to "debts accrued post-petition" cannot serve as the dividing line. We cannot read the definition of "debt" in so crabbed (sic) a manner and yet maintain fidelity to the expansive language set out by Congress. When a court decides a case governed by a statute, it resolves a   TOP      1 ABR 149  dispute according to a command given by the political branches. See Schroeder v. Copley Newspapers, 691 F. Supp. 1127 (N.D. Ill. 1988); Easterbrook, Legal Interpretation and the Power Of the Judiciary, 7 Harv. J.L. & Pub. Pol'y 87, 97 (1984). A court has no legitimate authority to revise legislative acts. Therefore, when the legislative branch speaks, as it has done here, we must obey its orders (assuming, of course, they are consistent with the Constitution).
    In re Elias, Id. at 336. It is also noteworthy that upon reconsideration the Rosteck court reversed itself and found for the Debtor at 99 B.R. 400. This decision was later affirmed by the Seventh Circuit in Matter of Rosteck, 899 F.2d 694 (7th Cir. 1990).

            Although it can at times lead to a "head start" for the Debtor, this court will follow the statute adopted by Congress as written. Contempo I has an unsecured general claim.

            Therefore, IT IS HEREBY ORDERED that the claim of Contempo I Condominium Association for administrative expense is denied. The claim of Contempo I CondominiumAssociation is allowed as a general unsecured claim in the sum of $1,004.64.

           DATED:    August 27, 1990.


                  DONALD MacDONALD IV
                  United States Bankruptcy Judge


    Serve: D. Rankine
    M. LaFollette
    K. Battley, Trustee
    U.S. Trustee